Concern over the outlook for orders continues to be a drag on the performance of wind power stocks, with the Wind Power Index of European stocks declining by 12.4% since the start of the year, versus a 1.2% gain in the FTSE Eurofirst 300 Index. In India, shares in Suzlon declined by 15% while the Sensex 30 Index rose by 2%. In China, on the other hand, Goldwind's share price outperformed the local market by a wide margin, increasing by 14% over the period, versus a 10% decline in the Shenzhen A-Share Index.

Among a weak environment for equities generally, investors seem unlikely to flock back to the wind power sector until the outlook for orders improves. Throughout 2009 it was widely predicted that demand, particularly in the US, would pick up late in the year. But fourth-quarter results were mediocre and guidance for 2010 has come riddled with caveats.

Vestas, despite reporting record sales and profits on February 10, has seen its share price decline by 12% since the start of the year. The company cuts its guidance for 2010 revenues to EUR7 billion, down from previous guidance of EUR7-8 billion, and reduced their targeted margin range to 10-11%, compared with their earlier guidance for margins of 11-12%. The state of the company's order book appears to be the main focus of attention. The company's EUR2.2 billion backlog of orders represents just 31% of 2010 sales guidance, compared with more than 70% in normal year. And although the company says it expects to receive 8-9GW of orders in 2010 - compared to 2009 orders of just 3GW - as one analyst comments, belief in such a major recovery in orders requires a leap of faith.

The slide in the price of Gamesa's shares, which began in September, has continued into 2010. On February 25, the company announced a plan to restructure its Spanish operations, but this did little to halt the downward trend and the stock had, by March 10, declined by 18% since January 1, 2010. The company has issued a downbeat assessment of its prospects in 2010, making particular reference to regulatory uncertainty in Spain and difficulties in raising project finance in the wake of the financial crisis.

Shares in Nordex have also performed poorly this year, declining 13% by the middle of March. The company announced fourth-quarter results on March 5, including an expected decline in operating profits to EUR40 million, compared to EUR63 million the year before. The company is scheduled to give detailed guidance for 2010 on April 19.

Repower, as the only European wind power company whose stock reached the middle of March in positive territory for the year - it rose 3% since December - has been a relatively good performer. But the company's relatively solid performance is probably less influenced by fundamentals than by expectations that Suzlon, which owns more than 90% of the firm's stock, will at some point make an offer to buy out the remaining minority shareholders.

Clipper, which performed well into the end of the year on an equity injection from United Technologies announced in December, has performed poorly during the year to date, declining 31.5% by the middle of March.

Suzlon announced third-quarter results on January 30

Like other companies in the sector, Suzlon says it expects orders to pick up in the second half. The company's chief operating officer, Sumant Sinha commented that "our order book is quite decent", adding: "The future is bright for us." But the stock market's reaction to the firm's results indicates a degree of scepticism in the market.

Goldwind, of China, has been the sector's star performer this year to date. On January 26, the firm raised its guidance and, on March 3, announced net profits in 2009 had risen 90% to CNY 1.75 billion on a 66% increase in sales to CNY 10.7 billion. The stock has since weakened amid concerns that turbine prices in China may have dropped as much as 30% and that 40% of China's wind turbine production capacity was sitting idle as demand has failed to keep pace with the huge increases in manufacturing capacity.

SECTOR DEVELOPMENT

The doomsayers who spent most of 2009 warning of wind market decline could not have been more wrong. Global market growth once more exceeded all expectations, accelerating from 26.6% in 2007, through 28.7% in 2008 to 32% in 2009. Not since 2002 has such a high growth rate been recorded - and at a time when the base figure was a lowly 24GW. The Windicator contains the year-end totals of operating wind power megawatts, country-by-country, for the previous year (see table below).

According to the most most recent figures, world wind reached over 159GW at the close of 2009, an addition of around 38.6GW - a 44% increase on the 27GW installed during 2008. The five-year compound annual growth rate (CAGR) moved up slightly to hit 27%. Given that the world was floundering in the aftermath of a financial sector meltdown just as the wind market needed big-time investment, the growth rates are impressive. If last year's 30% growth rate is repeated this year, the installed capacity by the end of the year will exceed 200GW.

Leading the way was Asia. For the first time, the region installed more wind than North America and Europe, which installed just under 10.5GW each. Asia hit 15.2GW. In another first, Europe was beaten by both North America and Asia as the world region installing the most megawatts annually, a position it has held since the 1980s. Its annual growth last year, however, at 15.9%, was slightly higher than the 15.3% in 2008. Europe accounted for 28% of new wind capacity in 2009, but its share of total world capacity dropped below 50% for the first time, to 48%. Asia's share is 23%, but growing strongly.

As for individual countries, China leapt ahead as the world's largest wind turbine market by far. Data released as Windpower Monthly went to press says it installed 13.8GW - the most ever achieved by a country in one year. In Europe, Spain was the star performer, installing 2.4GW, followed by Germany with 1.9GW. France and Italy were the only other European countries to install more than 1GW in 2009. Across the world, 17 countries now have more than 1GW of operating wind power, with 11 of those in Europe.

The world's 159GW of installed wind capacity at the start of 2010 is likely to produce more than 300TWh this year. The expected output from existing wind power installations is roughly equal to that of 41GW of fossil-fuel fired generation. Wind generally replaces coal-fired facilities, indicating a CO2 saving this year of about 240 million tonnes, the equivalent of taking about 40 coal power stations offline.

FEELGOOD FACTOR

After a sticky start to signing contracts in 2009 for 2010 turbine delivery, wind project developers took heart from a raft of economic stimulus measures around the world. We feel this year may be as much of a positive surprise as last, though China's growth curve could flatten.

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